Prepare for 'no growth economy', economist warns

A major correction to world GDP is inevitable, economist Hannes Kunz told attendees at an international forum in Colle di Val d'Elsa, Italy on Tuesday.

A major correction to world GDP is inevitable, the economist Hannes Kunz told attendees at an international forum in Colle di Val d'Elsa, Italy on Tuesday 8 June.

Kunz was among experts at Footprint Forum 2010, an international gathering of 200 scientists, economists, and business and government leaders to discuss the most urgent environmental challenges, and strategies to address them.

How the world manages the transition to a 'no-growth economy' will make the difference between whether it is a benign or a drastic correction, with per capita GDP stabilising at levels closer to those of 20 years ago, or over a hundred years ago he said.

Ecological economists talk about how we can rethink economic growth so we can also enable a sustainable world economy, he said. "But we don't have to rethink growth. Growth is going to go away."

"The financial claims on the world economy - such as debt obligations, pension expectations, stocks, investments - can only be paid back by extracting more resources and converting them into financial assets. But we have a finite amount of resources, and those resources are becoming less and less available, so we're trapped," he said. He cautioned assembled environmental experts that if this transition to a sustainable economy is not managed adequately "we won't have a chance to build something good afterwards."

Elsewhere at the conference, another expert warned that there was "no cheap-oil future". If humanity did not make the transition to a sustainable energy source, Mother Nature would, said Robert Rapier, Chief Technology Officer of Merica International.

According to Rapier, peak oil - when oil production rates begin an irreversible decline - will have a direct effect on global warming. "When there's a decline in oil production, the first thing we do is turn to coal plants and tar sands," he said. "We will demand that because we have built a society on cheap oil. But eventually fossil fuels will run out. That would solve our CO2 issue -- it would solve a lot of problems. But I don't like how Mother Nature solves these problems."